E-News from KPMG’s EU Tax Centre

Implementation of Pillar Two – State of play and observations on domestic implementation

On February 22, 2024, a panel of KPMG tax specialists discussed their observations on local implementation, practical tax and accounting considerations that in-scope groups should keep in mind when preparing for compliance with Pillar Two, as well as what more we can expected from the OECD Inclusive Framework going forward. For more details on that topic, please refer to KPMG’s dedicated Pillar Two State of Play tracker (PDF 827 KB) .

Pillar Two is happening. More than 30 jurisdictions around the world have either implemented the Global Anti-Base Erosion (GloBE) rules or have published draft legislation, with more expected to follow in 2024. While implementing legislation generally closely follows the OECD Model Rules, Commentary and subsequent Administrative Guidance, important variations arise with respect to:

• the timing of application of the three charging mechanisms: Domestic Minimum Top-up Tax (DMTT), Income Inclusion Rule (IIR) and Undertaxed Payments Rule (UTPR);
• whether jurisdictions opt to implement a DMTT, the timing of its application, the accounting standard the DMTT is based on, and the related administrative details (filing, allocation of liability, etc.);
• the extent to which OECD Administrative Guidance is reflected in domestic legislation; and
• administration, including filling requirements and deadlines, other than those related to the GloBE Information Return.

For a review of the session, please access the event page.

Beneficial ownership, governance and substance trends across the EU

The fight against tax avoidance and profit base erosion has been high on the agenda of international bodies – including the Organisation for Economic Co-operation and Development and the European Commission, as well as local tax authorities for the last decade. At EU level, approaches to abuse of double tax treaties and EU Directives have also been influenced by the decisions of the Court of Justice of the EU in the so-called “Danish cases”. The Commission is also attempting to take steps towards establishing a common minimum standard on criteria for denying treaty or EU Directive benefits to companies lacking economic substance and which are at risk of being misused for the purpose gaining tax advantages through the Unshell proposal. 

With these developments in mind, KPMG’s EU Tax Centre conducted an internal survey across the network of KPMG firms based in Europe to identify common trends and key challenges for taxpayers in four main areas:

• beneficial ownership;
• substance;
• corporate governance;
• the wider anti-treaty shopping and anti-tax abuse frameworks applicable at a local level, with a particular – focus on WHT-related measures; and
• the practice of the tax authorities in BO and substance matters, and level of certainty taxpayers can obtain.

The survey covered responses from 27 European jurisdictions and includes survey information valid as at September 2023. A recent blog post outlines key findings and trends identified as a result of the survey. 

Tax Reimagined – Pillar 2 readiness

On February 27, 2024 KPMG held a webcast on Pillar 2 readiness as part of the Future of Tax & Legal webcast series.

As companies are getting ready for the impact of Pillar 2, the focus has been on data readiness and understanding how the companies’ group structure will drive Pillar 2 outcomes. Groups are now turning their attention to technology readiness for year-end processes, processing GloBE computations, preparing and filing GloBE information returns and Qualifying Domestic Minimum Top up Tax (QDMTT) preparation.

In this instalment of the KPMG Future of Tax webcast series, you can hear from KPMG professionals on Pillar 2 readiness journey as well as see how technology can support the Pillar 2 process.

For a review of the session, please access the event page to register.

BEPS 2.0 – Amount B: Will it simplify your transfer pricing?

On February 29 , 2024, and on March 1, 2024 a webcast will bring together our leading global experts to speak about the new OECD guidance on Amount B which was released on February 19, 2024.

The objective of Amount B is to simplify transfer pricing rules for baseline marketing and distribution activities. Join KPMG professionals from around the world to hear their views on what Amount B will mean for you and whether it will actually make transfer pricing simpler.

Please access the event page to register.

BEPS Pillar 2 – Family Offices and private holding structures

On March 5, 2024 KPMG will hold the next webcast related to Pillar 2 as part of the Future of Tax & Legal webcast series.

KPMG family office leaders from various markets share insights and experiences on the potential impact of the global minimum tax on family offices, trusts and private structures.

Please access the event page to register.

Talking tax series

With tax-related issues rising up board level agendas and developing at pace, it’s more crucial than ever to stay informed of the developments and how they may impact your business.

With each new episode, KPMG Talking Tax delves into a specific topic of interest for tax leaders, breaking down complex concepts into insights you can use, all in under five minutes. Featuring Grant Wardell-Johnson, KPMG’s Global Head of Tax Policy, the bi-weekly releases are designed to keep you ahead of the curve, empowering you with the knowledge you need to make informed decisions in the ever-changing tax landscape.

Please access the dedicated KPMG webpage to explore a wide range of subjects to help you navigate the ever-evolving world of tax.